Oil Prices Hold Steady Amid Trumps Trade War Escalation

Highlights:

• Brent crude held above $70 per barrel and WTI above $68 at the time of writing, as oil steadied despite escalating trade tensions.
• President Donald Trump threatened 30% tariffs on EU and Mexican goods, weighing on risk sentiment and energy demand outlook.
• OPEC+ continues to relax supply curbs, but signs of backwardation in Brent suggest short-term demand remains resilient.

Oil prices held steady on Monday as U.S. President Donald Trump ramped up trade tensions with a threat to impose 30% tariffs on imports from both the European Union and Mexico, fueling new concerns over global economic stability and energy consumption. At the time of writing, Brent crude—the international pricing benchmark—was trading just above $70 per barrel, while West Texas Intermediate (WTI) continued to hold above $68. Brent had climbed 3% the previous week, but market sentiment remained fragile due to global macroeconomic risks.

Tariff Threats and Investor Caution

The latest tariff announcements follow a series of U.S. trade actions targeting countries such as Canada, Brazil, and Algeria. As a result, U.S. equity-index futures dipped, reflecting broader investor unease. Trump's pledge of a “major statement” on Russia later in the day further added to the market's nervousness. He also confirmed over the weekend that the U.S. will provide more military support to Ukraine.

Market in a Tug-of-War

So far in 2025, oil futures are still trading more than 5% lower year-to-date, highlighting the volatility gripping the market. Although geopolitical tensions in the Middle East have eased—particularly after the Israel-Iran standoff cooled—this has removed a key price support. Meanwhile, the escalating trade war is casting a shadow over the global demand outlook.

OPEC+ Supply Dynamics and Pricing Signals

OPEC+ has continued to unwind production cuts aggressively, raising fears of a potential supply glut. However, some delegates have hinted that a pause in easing could be considered soon.

Despite the uncertainty, near-term signals remain positive. Brent’s prompt spread—a key market indicator—stays in backwardation, with the front-month contract trading over $1 per barrel higher than the next, suggesting firm immediate demand.

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